Securities and Exchange Board of India's proposal to allow mutual fund houses to use celebrity endorsements is facing significant resistance from industry executives. According to reports from The Economic Times, critics warn that celebrity-driven advertising risks encouraging investors to choose fund houses based on familiarity and star appeal, rather than investment performance, fund management capabilities or long-term track records. A senior mutual fund executive expressed concerns that "people are likely to get easily swayed towards a fund house without looking at their actual credentials. Cases of mis-selling may also go up if such a scenario plays out."
The industry is particularly worried about the proposal's potential to widen the gap between large and small asset managers. As reported by The Economic Times, a mutual fund executive noted that "bigger AMCs, who have a larger cash pile, are likely to bombard the industry with celebrity ads. There would be no equal opportunity for smaller AMCs. Costs for all mutual funds will go up, depending on the celebrity they onboard." Another AMC executive stated that "We are not happy about this consultation paper and are not in favour of this, as it will substantially increase costs for all mutual funds. Every fund house would be forced to onboard celebrities, and as a result, the costs would go up."
Advertising budgets at major fund houses have already shown significant increases in recent years. According to The Economic Times, SBI Mutual Fund spent ₹67.8 crore on advertising, publicity and business promotion in FY26, up 42% from ₹47.7 crore a year earlier. HDFC Mutual Fund's spending rose 15% to ₹53.5 crore, while UTI Mutual Fund increased such expenditure by 37% to ₹21.5 crore. The proposal restricts celebrity endorsements to the AMC's brand and allows only factual mention of products or services, with celebrities prohibited from promoting specific mutual fund schemes.
Under the new framework, Sebi has proposed a broad definition of celebrity that extends well beyond traditional film stars and sportspersons. As reported by The Economic Times, the term would include people featured in the top 50 of any recognized celebrity index, lead actors in films, television shows or web series, sportspersons who have represented their country, television hosts and reality show winners. It would also cover social media influencers with over 500,000 followers on a single platform and virtual influencers or avatars. Industry executives said this inclusion significantly expands the scope and raises concerns over monitoring compliance across multiple digital platforms.
Despite industry concerns, the proposal is expected to help mutual funds expand their reach and broaden their investor base. According to The Economic Times, Dhirendra Kumar, founder and CEO of Value Research, said celebrity endorsements could expand mutual fund penetration if implemented within Sebi's proposed safeguards. Kumar noted that "these norms can bring in a new class of retail investors who hold no mutual funds today. That is good for investors and fund houses alike." Mutual fund assets have grown to ₹81.6 trillion as of end May, up 40% from two years ago, while the number of MF folios has risen to 270 million from 180 million in May 2024.
